Railways Maintenance Equipment Renewal

Location:

Montenegro

Project number:

51806

Business sector:

Transport

Notice type:

State

Environmental category:

B

Approval date:

08 Dec 2021

Status:

Concept Reviewed

PSD disclosed:

04 Oct 2021

Project Description

Provision of a sovereign loan of up to EUR 11 million to the Railways Infrastructure Company of Montenegro (the "Borrower", the "Company" or the "Client")  guaranteed by the state of Montenegro. The loan proceeds will be used to finance the purchase of machinery for the maintenance of civil engineering and electrical railway infrastructure to ensure appropriate railway safety standards (the "Project").

Project Objectives

The Project will support the development of the Montenegrin railway infrastructure sector through financing of key maintenance equipment required for proper functioning of the railway infrastructure. The Company's  maintenance services are not yet sustainable, as its aging maintenance equipment and vehicles acquired in the mid-1970s are fully amortized and obsolete. The Project will contribute to improvement of the Montenegro's railways safety and Company's efficiency. 

Transition Impact

ETI score: 67

Primary quality: Well-governed.

The Project will contribute to introducing a five-year public service obligation between the government and the company in line with international best practice. The project will also covenant the adoption of a new law on railways, developed as a result of a cooperation between the Transport Community led by the EU and Western Balkan countries. Also, the project will include the development of a corporate governance action plan ("CGAP") to assist the company to address the issues identified.

Secondary quality: Integrated.

The Project will contribute to the adoption of railway legislation compliant with the EU directives ensuring sustainable source of financing of the railway infrastructure, interoperability and better integration of the railway infrastructure with the Western Balkans region and the EU.

Client Information

RAILWAY INFRASTRUCTURE COMPANY OF THE REPUBLIC OF MONTENEGRO

Railways Infrastructure Company of Montenegro - ŽICG

ŽICG operates a standard-gauge network of 249 km, covering the whole of Montenegro. It was established in 2008 following the unbundling of the then Railways of Montenegro Company ("ŽCG") that was founded in 1908. The unbundling reforms were supported by the EBRD.

The Company is majority-owned by the state (77 per cent). The remaining 33 per cent is owned by local investment funds (15 per cent) and individual investors (8 per cent). The Company has 800 employees.

EBRD Finance Summary

EUR 11,000,000.00

Up to EUR 11 million.

Total Project Cost

EUR 11,000,000.00

The total project cost of up to EUR 11 million will be financed entirely by an EBRD loan backed by a sovereign guarantee from the Montenegro.

Additionality

Financing structure: The EBRD offers financing that is not available in the market from commercial sources on reasonable terms and conditions.

Standard setting: The client will make use of the EBRD's expertise on best international procurement standards and higher environmental standards above "business as usual".

Knowledge innovation and capacity building: The EBRD provides expertise, innovation and capabilities that are material to the timely implementation of the Project's objectives, including support to strengthen the capacity of the Client.

Environmental and Social Summary

The Project has been categorized B under ESP 2019, requiring environmental and social due diligence ("ESDD") for the planned acquisition of the new maintenance equipment.  

The ESDD will include a review of the machinery for the maintenance of electro-technical railways infrastructure to be purchased as well as the current environmental, health and safety ("EHS") management systems to confirm the Project is structured to meet the Bank's Performance Requirements ("PRs"). The Company has previously demonstrated institutional capacity to implement the Bank's 2014 Environmental and Social ("E&S") Policy and ESDD will verify and confirm this remains the case for the Banks 2019 E&S Policy. Based on the results of the ESDD, an environmental and social action plan ("ESAP") will be developed and agreed with the Company. The PSD will be updated once the ESDD has been completed.

Technical Cooperation and Grant Financing

Post-Signing:

Capacity building TC to support establishment of a project implementation unit ("PIU") at the Company and support it with the preparation of tender documentation, tendering process, monitoring of the use of proceeds and the project implementation.  

Following detailed due diligence, detailed assessment of TC needs will be available and additional post-signing TCs may be included at a later stage.

Company Contact Information

Dragan Radevic
dragan.radevic@zicg.me
+382 68 869 875
www.zicg.me
Trg Golootockih žrtava 13, Podgorica, Montenegro

Implementation summary


PSD last updated

04 Oct 2021

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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